Your September came in 30 percent light and the Thursday debit did not move an inch. Same $3,000, same hour, pulled against a month that did not earn it. Most owners grit their teeth and ride it out, because the contract says fixed and fixed sounds final.
Here is the part nobody walks you through at funding: that debit was never a promise of a number. An advance is a purchase of a slice of your future receipts - the agreement calls it the specified percentage - and the fixed debit is just an estimate of what that slice should come to each week. When the estimate and the real month split apart, most agreements hand you a tool to close the gap. It is called reconciliation, and most owners do not even know the right exists.
The math that set your debit
Say the underwrite read your statements at roughly $80,000 a month in deposits and the agreement purchased 15 percent of future receipts, the top of the usual 10 to 15 percent band. Fifteen percent of $80,000 is $12,000 a month, call it $3,000 a week. On a $50,000 advance at a 1.20 factor, that is a $60,000 payback, and $12,000 a month clears it in about five months. If factor rates are fuzzy for you, fix that first.
Now run the slow month. Receipts land at $56,000. Fifteen percent of $56,000 is $8,400. The debits still took $12,000. That is $3,600 pulled above the slice the contract actually purchased. In one month!
A fixed debit is a Procrustes bed - one size, every month stretched or trimmed to fit it. Reconciliation is the correction: the funder credits or refunds the overage, or drops the upcoming debits until the collected total matches the percentage. Not a favor - part of the deal you signed.
How to run the true-up
First, find the clause. Open your agreement and search for Reconciliation or Adjustment, then read two things: what you must send, and by when. Deadlines here have teeth. Some agreements want exact records within 10 days or the request is treated as withdrawn, so calendar the window before you ever need it.
Then build the packet the day the month closes:
- The full bank statement for the slow month, every page, not a screenshot
- Processing statements if card sales feed your receipts (Square, Toast, Clover, whatever you batch through)
- The arithmetic written out: actual receipts times the specified percentage, next to the total the debits took
- The ask in one line: credit or refund of the difference, and a reset payment going forward
Send it in writing to the servicing contact named in your agreement, not as a voicemail. Paper trail or it did not happen. And when the payment resets, check the first two debits against the new number, because to be frank, servicing desks miss their own memos more often than you would think.
One caution. Plenty of clauses reconcile in both directions, so if sales jump, the same math can move the debit up. Read whether yours runs one way or two before you lean on it.
What a true-up does and does not do
It does not shrink the payback. The $60,000 purchased amount stays $60,000 whether you deliver it in five months or seven. Reconciliation is pacing relief, not a discount - you are matching the debit to real receipts, not renegotiating the price.
What it does is keep the structure honest, and courts care about exactly that. New York’s test for whether an advance is a true purchase of receivables rather than a loan weighs three things: a reconciliation provision, a finite term, and what recourse the funder has if the merchant hits bankruptcy. A funder honoring your true-up is standing on its own contract. A shop that stalls the request or buries it under paperwork hurdles is telling you what it is, and that is worth remembering at renewal time.
And if your revenue swings by season every single year, stop fighting the fixed debit twelve months a year. I walked through holdback versus fixed debit already, and seasonal businesses usually belong on the holdback side from day one.
Tonight’s homework is 20 minutes. Pull last month’s statement, find the specified percentage on the first page of your agreement, multiply it against actual receipts, and set that number next to what got debited. If the debits won by more than a rounding error, the packet above is your next email.